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Another Export Route for Oil Sands Blocked

A city council in Maine took action on June 21 that all but blocks off another export route for Canada’s oil sands. The South Portland City Council voted 6-1 to block the export of oil from its waterfront, citing concerns about local air and water pollution.

The vote potentially kills off a larger plan by the oil industry to connect Alberta’s oil sands to the Atlantic Coast. South Portland, Maine is a key piece of the puzzle because it is home to the end of a pipeline that runs between the coast and Montreal. The pipeline currently only runs in one direction – it accepts oil imports and sends it northwest to Montreal.

Although plans were in the preliminary stages, the owner of the pipeline, Portland Pipe Line Corporation, had been considering a proposal to reverse the flow. This would allow oil sands to flow east to the coast.

But if completed, the project would require the construction of two large smokestacks, which would be needed to burn off toxic chemicals before the oil could be loaded onto ships. The combustion stacks would emit benzene, a carcinogen, and other harmful air pollutants into South Portland communities.

The prospect of a mini-surge of industrialization on the South Portland waterfront led to strong local opposition. A few hundred residents packed a June 21 town meeting that saw the city council vote on legislation that forbids the bulk loading of oil onto ships. When the legislation was approved, those in attendance erupted into applause.

Portland Pipe Line Corporation said the council’s move “would clearly be preempted by federal and state law,” and that it was an “illegal ordinance.” Supporters, including members of the council, are confident the ban will withstand legal scrutiny.

“I’d like to take this opportunity to plead with the [Portland Pipe Line Corp.] and Waterfront Coalition: Please do not fight this ordinance,” Councilor Tom Blake said. “This ordinance is the will of the people … All you’re going to do is alienate yourself even further.”

Oil producers in Canada’s oil sands are finding it increasingly difficult to get their product to market. Other routes have not proved any easier.

The Keystone XL pipeline, which would carry oil from Alberta to the Gulf of Mexico, has been in limbo for more than six years. It has been ground up in regulatory and political hell, and due to a groundswell of local opposition working in conjunction with national environmental groups, the issue was pushed to the top of the agenda in the U.S. Congress. And once an issue becomes controversial in Congress, partisan gridlock usually sets in.

The oil industry and its allies have long argued that blocking Keystone XL would accomplish nothing because Canada would simply ship the oil to China via their own west coast. And with Keystone XL on ice for now, Enbridge is trying to fulfill that promise. It is seeking to build the Northern Gateway pipeline, which would take Alberta oil to the west coast of Canada.

Canadian Prime Minister Stephen Harper – an ally of the industry – approved that route on June 17. However, a week later, the Canadian Supreme court handed down a major victory for First Nations tribes in and around the Canadian oil patch. The decision granted native tribes much greater power over major infrastructure projects. And with many of them voicing opposition to Northern Gateway, the west coast route for Canada’s oil sands could be in danger.

That is why the South Portland decision could be so important. With Keystone XL up in the air, the Gulf Coast route is uncertain. With empowered native tribes in Canada opposed to the Northern Gateway pipeline, the route to Canada’s west coast is in doubt.

Now, a relatively easy route to the Atlantic Coast – by reversing existing pipelines – could be blocked.

That means oil sands companies may have to continue to do what they have been doing: shipping much of their production by rail. But that is proving to be more costly than expected. As costs rise and the vast oil sands reserves are blocked in every direction they turn, production may have to be cut back. And this is exactly what environmentalists have been arguing for all along.

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Can you give us an overview of the ongoing expansions in the pipeline network carrying Canadian crude into the US and on to the Gulf Coast?

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